Forget about getting rich quick: The new investment climate, writes Mad Money host Cramer (Jim Cramer's Real Money: Sane Investing in an Insane World, 2005, etc.), is “treacherous....[B]izarre stock movements have become the staple, if not the hallmark, of this era.”
It’s an age of “random gyrations” and irrationality, and the 2010 “flash crash” may have been a technical hiccup, but it’s spooked investors ever since—and Cramer, formerly known for his exuberant approach (and often lampooned for it), has since taken a visibly more deliberate approach to the matter. This new book reflects his caution. For one thing, he observes early on, the stock market is now “hostage” to sector exchange-traded funds whose movements make the fundamentals meaningless; the big-basket approach is the tail that wags the dog. Of course, ETFs are easier to own than individually selected stocks, and, as Cramer observes, if you want to understand the cyclical nature of the market, you “have to be on top of world events, particularly in China, pretty much every day,” which, in theory, is just what fund managers do. Still, the author stresses fundamental wisdom pitched at different categories of investors: For a conservative investor, for instance, he recommends “pipeline master limited partnerships” as a point of entry into the energy market, while he notes the tea-cup shifts in commodity producers like Domino’s Pizza that, properly timed, can yield wealth. But who can time the market? Not the Federal Reserve, for sure, for its minutes are a month old and are worth “nothing at all.” Cramer’s long list of dos and don’ts (Relative valuations don’t justify a purchase”; “Stop falling in love with your stocks”) is worth the price of the book.
Look to this book for guiding principles rather than specific tips.